The New Robber Barons Also Robbers

It was only a matter of time.
First, the histrionic cry of “socialism” at the merest suggestion
of a more equitable distribution of the social good known as health
care. Then, the robust trade in New Deal denialism on the
right–the economic version of intelligent design theory, only
without the intelligence. And now, unsatisfied with turning the
clock back to 1929, Wall Street Journal editorial hand
Daniel Henninger has called for
the resuscitation of the Robber Barons. Henninger derides the
incremental efforts of the Obama administration to boost job
creation with tax credits and stimulus funds. That’s all just
bootless government meddling in the masterful free market, he
announces; in lieu of that we need “industries no one thought of
before”-and that means, in turn, that “we need vision, vitality,
and commercial moxie. The government is draining it [sic] away.”

And who better to summon these primal virtues forth than a new
breed of robber baron? Oh, not the bad kind-the unproductive
financial monopolists that Matthew Josephson laid low in his 1934
muckraking classic The Robber Barons. No, thanks to the
labors of Burton R. Folsom, who teaches history at the
fundamentalist Hillsdale College in Michigan we have-courtesy of
the publishing arm of the Tea-Party happy Young America’s Foundation-a refutation
of Josephson’s broad-brush portrait of the Gilded Age business
class as a rapacious plutocrats. The heroes in Folsom’s set-piece
revisionist history are “market entrepreneurs,” who hewed their
fortunes from the hardy natural blessings of the American land:
your John D. Rockefeller oil titans, your Cornelius Vanderbilt
railroad tycoons, et al. The Robber Barons you have to
look out for, by contrast, are the “political entrepreneurs,” the
no-account dandies and fops who gamed state legislatures for
monopoly contracts and locked out competitors with price-fixing
schemes and the like-such as, oh, Robert Fulton, whose ham-handed
chicanery to lock up steamship traffic on the Hudson River was
broken by the manful Vanderbilt, brandishing the slogan “New Jersey
must be free.” (You will no doubt be shocked to learn, by the way,
that Folsom also engages in New Deal denialism
on the side.)

As Henninger explains it, this baby-simple dichotomy points the
way out of the iron grip of Obamaism, and its efforts to defy the
sacred laws of market making-not merely via woeful stimulus
boondoggles, but market-distorting nightmares like “green job”
initiatives to retrofit the economy to diminish the impact of
climate change. What we need more of, Henninger insists, is modern
day market-entrepreneurs like Larry Ellison, the chieftain of
software giant Oracle. Let a thousand Ellisons bloom, Henninger
thunders-while Ellison may have a personal penchant for
opulent self-indulgence, he’s still contributing to the common
good, in classic Adam Smith fashion. “Someone in our politics has
to find the courage to say, So what?” Henninger says of the
high-living Ellison lifestyle. Intoxicated by the realization that
he is that courageous someone, Henninger builds to his
stirring peroration: “If the next Ellison and Oracle ripples into
American life as many new jobs and family incomes, I’m happy to be
grossed out by parties and boats. The alternative is a nation of
Pecksniffs, choking on virtue.”

Well, let the Pecksniffery begin, I say. We need not be long
detained by the purported intracapitalist combat between market and
political entrepreneurs in the Gilded Age, since no one in the
Industrial Age saw any value in such Talmudic niceties. Indeed, the
very term “Robber Baron,” referred back to medieval lords in
northern Europe who’d gouge peasants on the toll roads they owned;
government licensing was, in other words, a central feature of
the racket.

So it was for the entire cohort of U.S. robber barons, from John
D. Rockefeller-whom Henninger laughably only credits here with here
with having “innovated his way to energy primacy in the United
States”-to Leland Stanford, a notorious
purchaser of state legislatures. Henninger, Folsom and other
historical fabulists apparently have no acquaintance with the
shocking boondoggle known as the
Homestead Act, which directly launched the fortunes of railroad
tycoons like Stanford and Vanderbilt, while indirectly permitting
allied titans of industry like the oilman Rockefeller and steel
mogul Andrew Carnegie to vertically integrate their enterprises
into industrial-financial-political empires unto themselves.

By granting politically connected industrialists nominally
priced title to land and resource wealth and doling out railroad
land rights into perpetuity, the federal government engaged in a
pay-to-play brokerage that Josephson appraised as “one of the great
wonders of history.” [The Robber Barons, p. 51]. Indeed,
Henninger is far too modest on Rockefeller’s account; it was, after
all, his mammoth holding company, Standard Oil of New Jersey, that
prompted the first
major federal antitrust prosecution of the 20th century.

Throw a dart at any Gilded Age tycoon-which itself would have
been a fine idea at the time, come to think of it, save that so
many of them shared such a striking facility for buying themselves
a surrogate passport out of harm’s way -and you find they all
sprouted from the same fetid nexus of government favor and
cartelized pelf. Any competent history of the era will furnish a
motherlode of such edifying detail; I particularly recommend study
of the murderous antics of Carnegie’s right-hand man Henry Clay Frick, who’s
gotten a soft-sell treatment in the annals of history thanks to his
fondness for the pretty
paintings.

But recall, this is just Gilded Age 101 stuff. Consider instead
Henninger’s curious choice of latter-day model market entrepreneur,
Larry Ellison. Oracle cribbed its name from a CIA project, and the
federal spook agency was the company’s first major client when it
was founded in 1977-and at least a quarter of the firm’s revenues
comes from software sales to government agencies. As Mike Wilson,
author of The Difference Between God and Larry Ellison
flatly puts it, “Oracle wouldn’t exist if it weren’t
for government contracts.” And of course, in great Robber Baron
fashion, Ellison’s firm generously kicks the dosh back to the
purveyors of the People’s Business with campaign donations to
lawmakers who make key software procurement decisions. There is
also a seven-figure Washington lobbying budget. Small wonder that
the company’s government work quadrupled between 1997 and 2002-and
that, last fall, it had forked over $7.4 billion for
Sun Microsystems, whose Solaris software is integral to many
defense and intelligence applications.

So much for your latter-day model of an excellent “market
entrepreneur.” And thus, it seems that what our present day plight
calls for is not so much a Robber Baron revival as a new golden
age of muckraking. If nothing else, it would put the Daniel
Henningers of the world out of work.

Chris Lehmann is
really enjoying the recent vogue of people taking to newspapers to
entirely rewrite history.